Foreign Direct Investment into Transition Economies: Are the Balkans Different?

44 Pages Posted: 13 Jul 2013

See all articles by Saul Estrin

Saul Estrin

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Milica Uvalic

University of Perugia

Date Written: July 12, 2013

Abstract

The paper explores the determination of foreign direct investment (FDI) into the Balkan transition economies – Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Serbia. Detailed FDI inflows to Southeast Europe (SEE) are analyzed to determine the main differences in the volume, timing and sectoral structure of FDI within the region and in comparison to the Central East European countries. A gravity model to all transition economies during 1990-2011 is then estimated to assess whether the factors driving FDI to the Western Balkans are different. They are found to be so; even when size of their economy, distance, institutional quality and prospects of EU membership are taken into account, Western Balkans countries receive less FDI. These issues are of high policy relevance for the Balkan economies and ought to contribute to the current debate on the "new growth model".

Keywords: foreign direct investment, Balkans, transition

JEL Classification: P3, O4, F2

Suggested Citation

Estrin, Saul and Uvalic, Milica, Foreign Direct Investment into Transition Economies: Are the Balkans Different? (July 12, 2013). LEQS Paper No. 64. Available at SSRN: https://ssrn.com/abstract=2293100 or http://dx.doi.org/10.2139/ssrn.2293100

Saul Estrin (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Milica Uvalic

University of Perugia ( email )

Via Pascoli 22
Perigoa, 06121
Italy

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